ECON 2305 FINAL EXAM

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Which of the following is correct?

Unemployment rate= number of unemployed/(number of employed plus number of unemployed)x100

Efficiency

refers to how much a society can produce with its resources. Equality refers to how evenly the benefits from using resources are distributed among members of society.

What is the total labor force?

28 million

Which of the following is an example of barter?

A barber gives a plumber a haircut in exchange for the plumber fixing the barbers leaky faucet

The agency responsible for regulating the U.S. Monetary system is the

Federal reserve

GDP is used as the basic measure of a society's economic well- being. A better measure of the economic well-being of individuals in society is.

GDP per person.

Which of the following is correct?

People working part time are counted as "employed" by the Bureau of Labor Statistics

One of the differences between the GDP deflator and the consumer price index is

The GDP deflator relfects prices for all goods and services produced domestically and the consumer price index reflects prices for some goods and services bought by consumers.

Which of the following events would cause a movement upward and to the right along the supply curve for mangos?

The price of mangos rises

Economists call an institution designed to oversee the banking system and regulate the quantity of money in the economy

a central bank

If macaroni and cheese is an inferior good then an increase in

a consumers income will cause the demand curve for macaroni and cheese to shift to the left

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

a decrease in the demand for energy drinks

M1 includes

demand deposits

Which of the following is both included in M1 and M2

demand deposits

Good X and Good Y are substitutes. If the price of good Y increases, then the

demand for good x will increase

Macroeconomists study

economy-wide phenomena

A movement downward and to the right along a demand curve is called a (an)

increase in quantity demanded

unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called

structural unemployment

If the cross-price elasticity of two goods is positive then the two goods are

substitutes

If the price elasticity of supply for a good is equal to infinity, then

supply curve is horizontal

If the number of sellers in a market increases, then the

supply in that market will increase

Which group within within the Federal Reserve System meets to discuss changes in the economy and determine monetary policy?

the Federal Open Market Committee

two alternative measure of the overall level of prices are

the GDP deflator and the consumer price index

In 1870, the richest country in the world was

the United Kingdom

Which of the following is an example of physical capital?

the computer a secretary uses

When in France you notice that prices are posted in euros, this best illustrates moneys function as a

unit of account

When colonists in Virginia used tobacco as money, their money

was commodity money

The quantity demanded of a good is the amount that buyers are

willing and able to purchase

In the economy of Talikastan in 2015, consumption was $1000 GDP was $1950 government purchases were $500 and investment was $700. What were the net exports for this town in 2015?

-$250

When the price of a good is $5 the quantity demanded is $100units per month; when the price is $7, the quantity demanded is 80 units per month. Using the midpoint method, the price elasticity of demand is about

0.67

In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million, a labor force of 154 million and employment of 141.6 million. Based on these numbers the unemployment rate is

12.4/154

How many people are unemployed?

3 million

The consumer price index was 120 in 2012 and 126 in 2013. What was the inflation rate in 2013?

5.0 percent

What is the labor force participation rate?

93.3%

Measuring unemployment is the job of the

Bureau of Labor Statistics

The gains from specialization and trade are based on the absolute advantage

False

When an American doctor opens a practice in Canada, his production there is part of the production cost in the U.S. GDP

False

Demand deposits are not included in

M1 and M2

Which of the following is not correct?

Minimum wages are the predominant reason for unemployment in the U.S. economy

All U.S. paper dollars read "This note is legal tender for all debts, public and private." This statement represents which characteristic of U.S. currency?

U.S. paper money is fiat money

Elasticity is

a measure of how much buyers and sellers respond to changes in market conditions

Suppose that Jane enjoys diet coke so much that she consumes one can everyday. she enjoys gourmet cheese. If the price of diet coke rises, jane decreases her consumption by only a very small amount. but if the price of gourmet cheese rises, Jane decreases her consumption a lot. these examples illustrate the importance of,

a necessity versus a luxury in determining the price elasticity of demand.

The "yardstick" people used to post prices and record debts is called

a unit of account

In a simple-circular flow diagram, total income and total expenditure are

always equal because every transaction has a buyer and seller.

The opportunity cost of of obtaining more of one good is shown on the production possibilities frontier as the

amount of the other good that must be given up

Most goods and services produced at home

and most goods and services produced illegally are excluded from GDP

Which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as "unemployed"

anyone who is not employed, is available for work, has looked for work in the past four weeks, and anyone who is waiting to be recalled from a job which they have been laid off

Economic models

are simplifications of reality, and in this respect economic models are no different from other scientific models.

A shortage results when

binding price ceiling is imposed on a market

Last year max bought 6 pairs of athletic shoes when his income was $35,000. This year his income is $42,000 and he purchased 8 pairs of athletic shoes. Holding other factors constant, it follows that Max

considers athletic shoes to be normal goods

Job search

creates structural unemployment, while firms paying wages above equilibrium to improve worker health creates frictional unemployment

A leftward shift of a demand curve is called a(an)

decrease in demand

A decrease in the price of a good will

decrease quantity supplied

A table that shows the relationship between the price of a good and the quantity demanded of that good is called a

demand schedule

The consumption component of GDP includes spending on

durable goods, nondurable goods and services

Which of the following causes of unemployment is associated with wage rate above the market equilibrium level?

efficiency wages, minimum level wages and unions

When quantity demanded responds strongly to changes in price, demand is said to be

elastic

Net exports equal

exports minus imports

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded of the good rises

People who are unemployed because of job search are best classified as

frictionally unemployed

By definition imports are

goods produced abroad and sold domestically

By definition exports are

goods produced domestically and sold abroad

In the markets for factors of production in the circular flow diagram

households are sellers and firms are buyers

Microeconomics is the study of

how individual firms and households make decisions

A market demand curve shows

how much of a good all buyers are willing and able to buy at each possible price

Efficiency wages

increase productivity but increase unemployment

A decrease in the price of a good will

increase quantity demanded

Two goods are complements when a decrease in the price of one good

increases the demand for the other good

A person who takes a prescription drug to control high cholesterol most likely has a demand for that drug that is

inelastic

If the price elasticity of supply for wheat is less than 1 then the supply of wheat is

inelastic

When demand is perfectly inelastic the price elasticity of demand

is zero and the demand curve is vertical

Which of the following is not a reason economies experience structural unemployment?

job search

Human capital is the

knowledge and skills that workers acquire through education,training and experience

A group of buyers and sellers of a particular good is called a(an)

market

You receive money as payment for babysitting your neighbors children. This best illustrates which function of money?

medium of exchange

A central banks setting (or altering) of the money supply is known as

monetary policy

Commodity money is

money with intrinsic value

The consumer price index is used to

monitor changes in the cost of living over time

Goods with many close substitutes tend to have

more elastic demands

The legal tender (decree) requirement means that people are

more likely to accept the dollar as a medium of exchange

The amount of unemployment that an economy normally experiences is called the

natural rate of unemployment

The inputs into production of goods and services that are provided by nature such as land, rivers and mineral deposits are called

natural resources

If two goods are complements, their cross price elasticty will be

negative

The GDP deflator is the ratio of

nominal GDP to real GDP multiplied 100

The labors force equals the

number of people employed plus the number of people unemployed

The labor force equals the

number of people employed plus the number of people unemployed.

Changes in the GDP delator reflect

only changes in price

Changes in real GDP reflect

only changes in the amounts being produced

Currency includes

paper bills and coins

Who in the adult population is counted as employed?

people who are temporarily absent from their job and people who work without pay in a family members business

The equipment and structures available to produce goods and services are called

physical capital

When drawing a demand curve,

price is measured along the vertical axis, and quantity demanded is measured along the horizontal axis.

Productivity is the amount of goods and services

produced for each hour of a workers time.Its linked to a nations economic policies

The one variable that stands out as the most significant explanation of large variations in living standards around the world is

productivity

The price elasticity of demand measure how much

quantity demanded responds to price in change

Suppose the American Medical Association announces that men who shave their heads are less likely to die of heart failure. We could expect the current demand for

razors to increase

Which of the following statistics is usually regarded as the best single measure of a societies economic well-being?

real gross domestic product

"Other things equal when the price of a good rises, the quantity supplied of the good also rises, and when the price falls, the quantity supplied falls as well." This relationship between price and quantity supplied is

referred to as the law of supply

The phenomenon of scarcity stems from the fact that

resources are limited

An increase in supply is represented by a

rightward shift of a supply curve

An increase in demand is represented by a

rightward shift of the demand curve

Which of the following is included in M2 but not M1

saving deposits

Cyclical unemployment is closely associated with

short run ups and downs of the economy

Real GDP is a better gauge of economic well-being than is nominal GDP

true

Which of the following is the determinant of productivity?

Human capital, natural resources and physical capital per worker

An understanding of the best ways to produce goods and services is called

technology

For a good that is a necessity, demand is

tends to be inelastic

Which of the following is not a determinant of the price elasticity of demand for a good?

the steepness or flatness of the supply curve for the good

Which of the following is a part of your economics professors human capital?

the things she learned at some prestigious university

In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?

the value of the consumer price index is always 100 in the base year.


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